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How does product market competition shape incentive contracts?

Cuñat, Vicente and Guadalupe, Maria (2005) How does product market competition shape incentive contracts? CEPDP, 687. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753018675

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Identification Number: 687


This paper studies the effect of product market competition on the explicit compensation packages that firms offer to their CEOs, executives and workers. We use a large sample of both traded and non-traded UK firms and exploit a quasi-natural experiment associated to an increase in competition. The sudden appreciation of the pound in 1996 implied different changes in competition for sectors with different degrees of openness. Our difference in differences estimates show that a higher level of product market competition increases the performance pay sensitivity of compensation schemes, in particular for executives.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2005 the authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Accounting and Finance
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 24 Jul 2008 08:35
Last Modified: 31 Oct 2012 10:14

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